Question

The Welding Department of Majestic Company has the following production and manufacturing cost data for February 2020. All materials are added at the beginning of the process. Majestic uses the FIFO method to compute equivalent units.

Beginning work in process		$46,332		Beginning work in process		21,600	units, 10% complete
Costs transferred in		194,400		Units transferred out		77,760
Materials		82,080		Units transferred in		92,160
Labor		50,544		Ending work in process		36,000	units, 20% complete
Overhead		98,496

Prepare a production cost report for the Welding Department for the month of February. Transferred-in costs are considered materials costs. (Round unit costs to 2 decimal places, e.g. 2.25 and other answers to 0 decimal places, e.g. 125.)

Answer 1

Solution:

Majestic Company
Welding Department
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Material	Conversion
Units to be accounted for:
Beginning WIP Inventory	21600
Units started this period	92160
Total unit to be accounted for	113760
Units Accounted for:
Units completed and transferred out
From beginning inventory Material - 0% Conversion - 90%	21600	0	19440
Started and completed currently	56160	56160	56160
Transferred to finished goods	77760	56160	75600
Units in ending WIP Material - 100% Conversion - 20%	36000	36000	7200
Total units accounted for	113760	92160	82800

Majestic Company
Welding Department
Computation of Cost per Equivalent unit
Particulars	Total cost	Material	Conversion
Current period cost	$425,520.00	$276,480.00	$149,040.00
Equivalent units		92160	82800
Cost per equivalent unit		$3.00	$1.80

Majestic Company
Welding Department
Producton cost report - FIFO
Particulars	Total cost	Material	Conversion
Cost Accounted for :
Cost assigned to unit transferred out:
Cost from beginning WIP Inventory	$46,332
Current cost added to complete beginning WIP:
Material	$0	$0
Conversion (19440 * $1.80)	$34,992		$34,992
Total Cost from beginning inventory	$81,324
Current cost of unit started and completed:
Material (56260*$3)	$168,480	$168,480
Conversion (56160*1.80)	$101,088		$101,088
Total cost of unit started and completed	$269,568
Total cost of unit transferred out	$350,892
Cost assigned to ending WIP:
Material (36000*$3)	$108,000	$108,000
Conversion (7200*$1.80)	$12,960		$12,960
Total ending WIP inventory	$120,960
Total cost accounted for	$471,852